Banks seek FDIC crisis-era deposit guarantee extension

Leaders of many small banks across the country are pushing Congress to extend the FDIC's crisis-era blanket guarantee on all deposits before the measure expires Dec. 31, according to the Wall Street Journal.

The Journal reports that the measure covers nearly $1.5 trillion in deposits, and cites congressional aides as saying there is little hope a deal will be reached in Congress to extend the Federal Deposit Insurance Corp. program.

If it it not extended, many small bankers believe that customers will move upwards of $250 billion out of their banks and into larger banks that are deemed safer, according to the report. It could also lead to companies and municipalities moving their payroll funds to larger banks or even into money market or mutual funds.

Big banks are opposed to an extension, saying any move "may create the misperception of instability, at the very time that the financial-services sector has made significant and positive reforms," the report quoted a statement from the Financial Services Roundtable, which The Journal said includes JPMorgan Chase & Co. and Wells Fargo & Co., among others.